BUSINESS

Sugar mills want cane policy overhaul

The policies on sugarcane and sugar, including the by-products should be reviewed and carefullyre-formulated

The policies on sugarcane and sugar, including the by-products should be reviewed and carefullyre-formulated  

Tamil Nadu, the country’s fourth largest sugarcane producing state, needs to overhaul its policy and rationalise taxes to ensure the mills are profitable, a top official of Indian Sugar Mills Association (ISMA) said.

The current policy puts the burden solely on the mills which is both “unreasonable and unaffordable” as this leads to mounting cane arrears said Abinash Verma, ISMA Director General.

The policies on sugarcane and sugar, including the by-products should be reviewed and carefully re-formulated. With over three lakh hectare under sugarcane cultivation, Tamil Nadu was the fourth largest sugar producing state in the country, he said.

Sugarcane prices must be determined in relationship to the sugar mill revenues, he said If still there a gap between what the mills can pay (for the cane) and the state government’s State Advised Price, it should be filled bythe state.

The state had four lakh farmers and 45 sugar mills. Tamil Nadu accounts for seven to nine per cent of the country’s total sugar production of 260 lakh tonne.

For the 12-month period ended September 2015, it produced nearly 12 lakh tonne against its production capacity of 30 lakh tonne sugar. The area under sugarcane cultivation had reduced to 50-60 per cent of what it was a few years ago, resulting in under-utilisation of capacities.

Sugarcane prices have been increased by 60 per cent by the Union government in the last five years.

Currently, the Tamil Nadu government has fixed the State Advised Price at Rs.2,850 per tonne for 2015-16 sugar season, which was Rs.550 more than the Fair and Remunerative Price fixed by the Centre. This was the highest in the country, if one considered the sugar recovery ratio, he said.

At an average of 9.2 per cent sugar recovery rate in the state, the production cost per quintal of sugar works out to Rs.3,100.

“Compare this with the current ex-mill sugar price in Tamil Nadu of around Rs.2,850 per quintal, and one would understand how bad the situation is for the sugarcane mills and sugarcane farmers,” Mr. Verma said.

According to ISMA, sugar mills in Tamil Nadu were located close to the port and had quick access to Sri Lanka. But out of about six lakh tonne of white sugar imported by Sri Lanka, India was able to meet about 50 per cent. The balance was met by Brazil. India was unable to take advantage of the situation because of high sugarcane costs.

Mr. Verma urged the state government to develop a model followed by other states to ensure that the sugarcane farmers got their payments on time and if required, assist the mills in the payment especially when the revenue realisation was poor.

Calling for removal of five per cent VAT on sugar, he said it raised the cost of sugar produced in Tamil Nadu, which was already high due to low sugar recovery. It thus made it all the more uncompetitive as revenue loss for mills was over Rs.200 crore a year.



The policies on sugarcane and sugar, including the by-products should be reviewed and carefully re-formulated.



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